Competing for FDI on the basis of low labour costs is usually not an advantage for Canada or other developed economies. Developing countries will win every time on that count.
China, for example, is gaining a world advantage in goods production with its large pool of low-cost labour, which is attracting increasing foreign direct investment. A growing number of consumer goods are being manufactured in China, not necessarily for domestic markets but for exports.
India is becoming an attractive place for FDI in business services such as software development and call centres. Canada did have a competitive advantage in attracting investment in call centres to serve North American markets. But improvements in world communication systems and the large pool of low-cost. English-speaking workers in India have reduced the attractiveness of Canada for that type of investment. One of the U.S. global business executives interviewed said that India has beaten Canada for the company's next investment in call centres. Another executive of an American company with subsidiaries in 70 countries mentioned that this company would be locating its helpdesk in India to serve English-speaking customers in North America, the United Kingdom, Australia and parts of Asia.
While Canada and other developed countries may not be able to compete on labour costs, they do offer advantages that may be missing in developing countries. These advantages arise in areas such as labour reliability and skills, quality control on production, political stability and the development of the legal system. All of these factors are considered in foreign investment decisions.